Fair Value Measurements

12 Months Ended

Jul. 01, 2011

Fair Value Measurements [Abstract]

Fair Value Measurements

Note 10.  Fair Value Measurements

Financial assets and liabilities that are remeasured and reported at fair value at each reporting period are classified and disclosed in one of the following three levels:

Level 1.  Quoted prices in active markets for identical assets or liabilities.

Level 2.  Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3.  Inputs that are unobservable for the asset or liability and that are significant to the fair value of the assets or liabilities.

The following table presents information about the Company’s financial assets and liabilities that are measured at fair value on a recurring basis as of July 1, 2011, and indicates the fair value hierarchy of the valuation techniques utilized to determine such value (in millions):

	Fair Value Measurements at
	Reporting Date Using
	Quoted Prices
	in Active		Significant
	Markets for		Other			Significant
	Identical		Observable			Unobservable
	Instruments		Inputs			Inputs
	(Level 1)		(Level 2)			(Level 3)		Total
Assets:
Cash equivalents
Money market funds	$	721	$	—		$	—	$	721
U.S. Treasury securities		—		60			—		60
U.S. Government agency securities		—		78			—		78
Total cash equivalents		721		138			—		859
Auction-rate securities		—		—			15		15
Total assets at fair value	$	721	$	138		$	15	$	874
Liabilities:
Foreign exchange contracts	$	—	$	(5	)	$	—	$	(5	)
Total liabilities at fair value	$	—	$	(5	)	$	—	$	(5	)

The following table presents information about the Company’s financial assets that are measured at fair value on a recurring basis as of July 2, 2010, and indicates the fair value hierarchy of the valuation techniques utilized to determine such value (in millions):

	Fair Value Measurements at
	Reporting Date Using
	Quoted Prices
	in Active		Significant
	Markets for		Other		Significant
	Identical		Observable		Unobservable
	Assets		Inputs		Inputs
	(Level 1)		(Level 2)		(Level 3)		Total
Cash equivalents
Money market funds	$	458	$	—	$	—	$	458
U.S. Treasury securities		—		385		—		385
U.S. Government agency securities		—		370		—		370
Total cash equivalents		458		755		—		1,213
Auction-rate securities		—		—		15		15
Foreign exchange contracts		—		17		—		17
Total assets at fair value	$	458	$	772	$	15	$	1,245

Money Market Funds.  The Company’s money market funds are funds that invest in U.S. Treasury securities and are recorded within cash and cash equivalents in the consolidated balance sheets. Money market funds are valued based on quoted market prices.

U.S. Treasury Securities.  The Company’s U.S. Treasury securities are investments in Treasury bills with original maturities of three months or less, are held in custody by a third party and are recorded within cash and cash equivalents in the consolidated balance sheets. U.S. Treasury securities are valued using a market approach which is based on observable inputs including market interest rates from multiple pricing sources.

U.S. Government Agency Securities.  The Company’s U.S. Government agency securities are investments in fixed income securities sponsored by the U.S. Government with original maturities of three months or less, are held in custody by a third party and are recorded within cash and cash equivalents in the consolidated balance sheets. U.S. Government agency securities are valued using a market approach which is based on observable inputs including market interest rates from multiple pricing sources.

Auction-Rate Securities.  The Company’s auction-rate securities have maturity dates through 2050, are primarily backed by insurance products and are accounted for as available-for-sale securities. These investments are expected to be held until secondary markets become available and as a result, are classified as long-term investments and recorded within other non-current assets in the consolidated balance sheets. Auction-rate securities are valued using an income approach which is based on a discounted cash flow model or a credit default model. The inputs to the discounted cash flow model include market interest rates and a discount factor to reflect the illiquidity of the investments. The inputs to the credit default model include market interest rates, yields of similar securities, and probability-weighted assumptions related to the creditworthiness of the underlying assets.

Foreign Exchange Contracts.  The Company’s foreign exchange contracts are short-term contracts to hedge the Company’s foreign currency risk related to the Thai Baht, Malaysian Ringgit, Euro and British Pound Sterling. Foreign exchange contracts are classified within other current assets in the consolidated balance sheets. Foreign exchange contracts are valued using an income approach which is based on a present value of future cash flows model. The market-based observable inputs for the model include forward rates and credit default swap rates.

The following table presents the changes in Level 3 financial assets measured on a recurring basis (in millions):

	U.S.
	Government
	Agency			Auction-rate
	Securities			Securities			Total
July 3, 2009	$	1		$	18		$	19
Sales		—			(3	)		(3	)
Maturities		(1	)		—			(1	)
July 2, 2010	$	—		$	15		$	15

For the year ended July 1, 2011, there were no changes in Level 3 financial assets measured on a recurring basis. The Company had no liabilities that were re-measured and reported at fair value on a recurring basis during the year ended July 2, 2010.